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Introduction Chapter

1.1
What is the “Cohort Default Rate Guide”?. . . . . . . . . . . . . 1.1-1

How is this guide organized?. . . . . . . . . . . . . 1.1-2

How does this version of the guide differ


from previous versions of the guide?. . . . . . . . . . . . . 1.1-3

How does a school or data manager use this guide? . . . . . . . . . . . . 1.1-4

How can a school or data manager provide feedback on this guide? . . . . . . . . . . . . 1.1-5
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Introduction Chapter 1.1

Introduction
What is the “Cohort Default Rate Guide?”

CHAPTER 1.1 -
Introduction
The “Cohort Default Rate Guide” (guide) is a publication that the U.S.
Department of Education (the Department) designed to assist
schools with their Federal Family Education Loan (FFEL) Program and
William D. Ford Federal Direct Loan (Direct Loan) Program cohort
default rate data. This guide should be used as a reference tool in
understanding cohort default rates and processes. This guide is good
for a five-year period. An electronic version of this guide is available at

http://sfa4schools.sfa.ed.gov/

or

http://www.ifap.ed.gov

The information found in this guide does not supersede or alter any
regulatory or statutory requirements that are in effect. If the informa-
tion in this guide conflicts with the regulations or statute, the
regulations and/or statute that are in effect take precedence. The
legislation authorizing the FFEL and Direct Loan programs can be
found in Title IV of the Higher Education Act (HEA) of 1965, as amend-
ed. The primary regulations that provide for the cohort default rate
process can be found in Subpart M of Section 668 of the Code of
Federal Regulations (CFR).

In addition, the Department also publishes FFEL cohort default rates


for guaranty agencies and lenders. For information on guaranty
agency and lender cohort default rates, call the Department at 1-202-
401-7482 or visit the Department's Web site at

http://sfa4schools.sfa.ed.gov/

or

http://www.ed.gov/offices/OSFAP/IGAL

The Department also publishes Federal Perkins Loan Program cohort


default rates for schools. For information on Federal Perkins Loan
Program cohort default rates, call the Department at 1-202-708-7741.

An electronic version of this guide is available at

http://www.ifap.ed.gov

Page 1.1 - 1
Chapter 1.1 Introduction

How is this guide organized?

The material in this guide is organized into four main parts. Each part
is further divided into chapters. The four main parts are
CHAPTER 1.1 -
Introduction

Part I: Introduction.

Part One consists of this introduction.

Part II: General Information.

Part Two consists of six chapters, five of which cover calculating


cohort default rates, cohort default rate effects, the loan record
detail report, change of status and evasion, and Department
offices and addresses. This section also contains a chapter
entitled “Loan Record Detail Report Tools,” which contains
various tools to assist a school in reading a loan record detail
report. Among these tools are data manager codes and contact
information.

Part III: Strategy.

Part Three consists of three chapters. The first deals with


cohort default rates strategies. The cohort default rate strategies
chapter reviews the steps a school can take to reduce rates,
minimize the possibility of sanctions, and gain benefits. This
chapter contains an overview of the cohort default rate process
and timelines. The second chapter discusses repayment
information and how a school can track borrower repayment
activities. The third chapter discusses data manager monthly
status reports.

Part IV: Challenges, Adjustments, and Appeals.

Part Four consists of 11 chapters. The first eight deal with


the eight challenges, adjustments, and appeals a school may
initiate. The next two discuss the two appeals the Department
initiates. All 10 of these chapters contain detailed discussions of
the challenge, adjustment, or appeal that is the subject of the
chapter. For those challenges, adjustments, and appeals that
involve data managers in addition to schools, the data manager
material has been incorporated with the school material into

Page 1.1 - 2
Introduction Chapter 1.1

one chapter. This is different from previous versions of this


guide, which divided school information and data manager
information into separate chapters. The final chapter contains
tools to assist a school when submitting a challenge, adjust-

CHAPTER 1.1 -
Introduction
ment, or appeal and, when appropriate, tools to assist a data
manager when responding to a challenge, adjustment, or
appeal.

How does this version of the guide differ from previous versions of the
guide?

There are several major changes in this version of the guide from
previous versions of the guide. These include

™ combining the two former guides, the “Draft Cohort Default


Rate Guide” and the “Official Cohort Default Rate Guide,” into
one guide;

™ incorporating the new regulations became effective on July 1,


2001;

™ referring to the Direct Loan Servicer, guaranty agencies, lenders,


and FFEL servicers as data managers;

™ combining school information and data manager information


into the same chapter instead of dividing the information into
separate chapters, as in previous versions of the guide;

™ rewriting the guide to make it clearer and easier to understand


and use; and

™ redesigning the guide so that future changes can be handled by


sending out change pages instead of sending out a completely
new guide.

Page 1.1 - 3
Chapter 1.1 Introduction

How does a school or data manager use this guide?

Figure 1.1.1 Figure 1.1.1 provides examples of how a reader should use the guide
based on the reader’s situation.
CHAPTER 1.1 -

How to Use this Guide


Introduction

If you fit this description: Reference these areas of the guide:


• A school representative
• not familiar with cohort default rates Chapter Chapter Chapter
• looking for general information
see
2.1 2.2 2.3
• A school representative
• not familiar with cohort default rates Chapter Chapter Chapter Chapter
see then then
• received a draft or official cohort
default rate notification letter
2.1 2.2 2.3 3.1
• A school representative
• familiar with cohort default rates Chapter Part
• received a draft or official cohort see
3.1 then
IV
default rate notification letter
• A school representative
• not familiar with cohort default rates
• looking for information on actions Chapter Chapter Chapter
the school can take prior to the see then
release of the draft or official 2.1 2.2 2.3
cohort default rates
• A school representative
• familiar with cohort default rates
• looking for information on actions Chapter Chapter
the school can take prior to the see
3.1 3.2
release of the draft or official
cohort default rates
Chapter
• A representative of a school
contemplating a change in status see 2.5
• A representative of a school that has Chapter
received a notice of provisional certification see
4.5
• A data manager representative Chapter Chapter Chapter Chapter
• not familiar with cohort default rates
• looking for general information
see
2.1 2.2 2.3 then
3.1
• A data manager representative
• not familiar with cohort default rates Chapter Chapter Chapter
see
• looking for information about a
specific challenge, adjustment,
2.1 2.2 2.3 then

or appeal

• A data manager representative See the relevant chapter


• familiar with cohort default rates in Part IV dealing with Part
• looking for information about a
specific challenge, adjustment,
see
the specific challenge,
adjustment, or appeal
IV
or appeal
see

Page 1.1 - 4
Introduction Chapter 1.1

As a design note, the guide uses a two-third/one-third layout, where


two-thirds of the page contains text and one-third of the page is a
margin. In the margin at the start of each chapter you will find a
reference to the section of the Code of Federal Regulations that

CHAPTER 1.1 -
Introduction
applies to that chapter. You will the sections of the CFR dealing with
cohort default rates in Appendix A. The margins will also contain
various illustrations designed to assist you with understanding the
material in the guide. The margins also provide a space for notes that
you may wish to take while reading the guide. There is also a glossary
that contains the definitions of frequently used words and phrases.

How can a school or data manager provide feedback on this guide?

The Department is interested in receiving feedback regarding the


new guide. If you have questions, comments, or suggestions concern-
ing the content, format, and/or structure of this guide, please fill out
and return the user comment card or call the Department's Default
Management office at 1-202-708-6048. You may also send comments
via email to

OSFA_IPOS_Default_Management_Division@ed.gov

The user comment card is at the end of this chapter. If sent by com-
mercial overnight mail/courier delivery, the completed card should
be sent to:

U.S. Department of Education


Default Management
ATTN: Comments Worksheet
Portals Building, Room 6300
1250 Maryland Avenue, SW
Washington, DC 20024

If sent by U.S. Postal Service, the completed card should be sent to:

U.S. Department of Education


Default Management
ATTN: Comments Worksheet
Portals Building, Room 6300
400 Maryland Avenue, SW
Washington, DC 20202-5353

Page 1.1 - 5
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Was the Guide easy to understand? YES NO
Did you like the separation of information? YES NO
Did this format make it easier for you
to prepare a challenge or response? YES NO
Did this format make it easier for you
to prepare an adjustment or response? YES NO
Did this format make it easier for you
to prepare an appeal or response? YES NO
Were the instructions and spreadsheets
easy to follow and understand? YES NO
Are there issues not discussed in the Guide
that you would like to see in future editions? YES NO

General comments
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________

The following information is optional. The Department may contact you


for further clarification on your comments.

Organization Name: _______________________________

School OPE-ID # (if applicable): _______________________________

Organization Mailing Address: _______________________________


_______________________________
_______________________________

Person completing this form: _______________________________

Telephone number: _______ - _______ - ____________